Electronic Currency

Electronic currency (also known as e-money, electronic cash, digital cash or digital currency) is the digital form of paper currency. E-cash makes monetary transactions easy especially for transferring huge amounts or from another location. It enables more secure and anonymous purchase of items. Electronic Funds Transfer (EFT) is an example.

There are some advantages of using electronic currency. In this high-tech era, online banking, debit cards, online bill payments and internet business are reducing the need for paper money. Now, most of the banks offer services like funds transfer, stock purchase, e-banking and other services. These services provide convenience to customers in their transactions because it does not involve any physical cash or checques. Customers do not need to waste their time waiting in lines. Besides that, debit cards and online bill payments allow users to transfer funds from personal accounts to business accounts without any actual transfer of paper money.

E-cash is good for micropayments, which are small payments that are not significant enough to warrant the use of credit cards. It can be done anonymously. Stored-value cards like Visa Cash can be used to make purchases online (on the Internet) or offline (in the physical world). Online involves interaction with bank to deal with third parties while offline means conducting a transaction without involving a bank.

Person-to-person payments like transferring funds between individuals are also one of the common e-payment schemes. It is fast and easy. Automated Teller Machines (ATM) seem obsolete with the use of e-cash. For more information on what is e-cash.

Although there are many benefits to digital cash, there are also its limitations. Fraud over digital cash has become a main issue in recent years. There is the risk of privacy invasion and hacking of bank records associated with electronic money. Factors that may hinder the use of the technology involved in digital cash include power failures, loss of records and unreliable softwares.

References:

http://projects.exeter.ac.uk/RDavies/arian/emoneyfaq.html

http://www.businesspme.com/uk/articles/trade/90/Electronic-money---advantages-and-disadvantages.html